Renewables Obligation to be extended to 2020?

20/03/2012

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The government's apparant inability to find a counterparty to guarantee the contracts for difference (CFD) element of its proposals to reform the electricity market could lead to the Renewables Obligation (RO) being extended three years until 2020. That's the view of one of the MPs on the Energy and Climate Change Select Committee.

Alan Whitehead, Labour MP for Southampton Test, highlighted the issue in recent blog post. He pointed to National Grid's reluctance to take on a payment guarantors role.

Executive director Nick Winser told the Committee back in January that "we are currently expecting that they will not be backed financially by National Grid" (see Q88 on this link).

Writing here Whitehead warned that Decc has very little time left to solve the problem of who that counterparty might be. He pointed out that making the taxpayer pick up the tab might pose a problem with the EU's state aid rules. "I would put a little money... on an extension of the Renewable Obligation Certificate Regime, perhaps to 2020," said Whitehead.

Decc admitted yesterday that state aid approval for CFDs could come too late for nuclear developers - see this link.